Six Dos and Don'ts when setting up a client's SMSF

Self-managed super funds (SMSFs) are the flavour of the month but it’s important not to just “jump on the bandwagon”, says Jenny Brown of JBS Financial Strategists.

“Make sure you're on top of all your SMSF training and education. You should also become a member of an SMSF professional association, and you need to regularly attend professional development days,” advises Brown, who has specialised in setting up and advising SMSFs for 17 years.

Here are six important Dos and Don'ts when it comes to lining up your client with SMSF solutions.

“Don't set up a fund with $50,000 in it if they'll have ongoing costs of $2,000 or $3,000. It will only eat away at the balance,” she says.

“But if you've got somebody who really wants to buy a business property and has enough to do so, then an SMSF is generally the only way to go within the super environment.”

2. DO look at using ETFs

For many clients, the ability to choose their own shares is often a driver for setting up an SMSF. But, as ASIC warns, unless they have a lot of money to invest it's unlikely their portfolio will be as diversified as a fund manager can achieve.

“The advent of ETFs has provided a lower cost version of what a managed fund historically has done,” says Brown.

“So you can pick up an indexed ETF for quite a low cost and then you can build a portfolio around it.”

3. DO use software and platforms that you and your client are comfortable with

Software and platforms that provide real time feeds make both your life and your clients’ lives easier, says Brown. There's no shortage of options available; it's about finding what works best for you.

Then there’s financial planning software such as XPLAN and Midwinter where an adviser can effectively create a wrap platform.

“You’ve got to make sure the software or platform has good reporting, that the accuracy of the data is there, and that it has all the functionality you need,” she says.

It's equally vital to make sure your client understands the importance of their super.

“Some clients can't manage their own money. So, you need to be really careful with making sure the client understands that yes, it's superannuation, and yes, ultimately it belongs to them, but it's for retirement purposes,” Brown says.

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Important: This article has been prepared without taking account of the objectives, financial or taxation situation or needs of any particular individual. Before acting on the information, you should consider its appropriateness to your circumstances and if necessary, seek appropriate professional advice. Any information used in this article is for illustrative purposes only. JBS Financial Strategists is an external entity that is not a member of the Commonwealth Bank of Australia Group of Companies (the Group) and the content or any view expressed by JBS Financial Strategists and its employees does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. CBA, nor members of the Group accept any liability for losses or damage arising from any reliance on external parties their products, services and material.

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